recap struggle 7

Question 1

what are 5 benefits of S.W.O.T analysis

Answer 1

• see areas that need to improve
• helps set objectives and strategies
• facilitate development and logical plans
• helps to asses the degree of risk
• low cost/ straight forward

Question 2

what are 5 limitations to S.W.O.T analysis

Answer 2

• isn’t looking at the future
• can be subjective as on how you interpret it
• grey or 2 sided areas
• need to judge relative importance
• only as good as the data it

Question 3

what do the strategies help achieve

Answer 3

the objectives

Question 4

what is a strategy

Answer 4

long term plan to achieve the businesses vision through attaining its corporate objectives

Question 5

what are the 4 external influences on corporate objectives

Answer 5

state of the economy
- global prices
- technological influences
- migration

Question 6

what are the influences on the mission

Answer 6

• value of founders
• industry
• society
• ownership

Question 7

what does return on capital employed show

Answer 7

how eddficent a business is using its capital employed to generate its profits

Question 8

how do you imporve ROCE

Answer 8

paying of debt

Question 9

what does liquidity show

Answer 9

if a business can survive in the short term
- can they manage to pay of their debts

Question 10

what do efficiency ratios show

Answer 10

how efficient a firm is working on managing its cash and inventory
- internal managment

Question 11

what is gearing

Answer 11

the proportion of a businesses capital via long term debts

Question 12

what are the adv of financial ratios

Answer 12

• quantative
• good indicator of outcomes
• aids decision making

Question 13

what are the dis of financial ratios

Answer 13

• difficult to break the balance and income sheets down
• need to consider reasons behind the ratios
• accounts could be window dressed

Question 14

what are the ways to asses the short and long term perfroamnce

Answer 14

• R/D
• sustainability
• profit analysis
• employee engagement
• customer satisfaction
• brand image/ rep

Question 15

what are ways to measure non financail perfromance

Answer 15

• break even output
• core competencies
• the tripple bottom line
• lab tur
  customer satisfaction

Question 16

what are 3 benefits of net profit value

Answer 16

• considers all future cash flow
• builds risk into the process
• produces a ‘yes/no’ decision

Question 17

what are the 3 drawbacks to net profit value

Answer 17

• most complicated compared to APR and paybacks
• choosing the discount rate is hard, particularly for long projects
• results can be influenced/ manipulated using the discount rate

Question 18

what are the 3 benefits to paybacks

Answer 18

• simple and easy to calculate and easy to understand the ethics
• emphasis speed of return which is good for markets which change rapidly
• straight forward to compare competing projects

Question 19

what are 4 drawbacks to paybacks

Answer 19

• it ignores cash flow once it has been received so it doesn’t look beyond
• takes no account of the ‘time value of the money’
• doesn’t take into consideration the potential changing variables
• may encourage short-term thinking as only go for the ones that payback quicker

Question 20

what are the 3 benefits of average rate of return

Answer 20

• simple to understand and calculate
• easy to compare to APR with other key target rates of return to help make a decision
• uses all the returns generated by a project unlike paybacks which ignores everything after a project pays of its fees

Question 21

what are 3 drawbacks to average rate of return

Answer 21

• estimate so may not be accurate as a forecast
• ignores the timings it takes to return so best years are actually a few years down the line
• doesn’t adjust for the time-value of money

Question 22

what are the 3 factors influencing investment decisions

Answer 22

• rate of interest
• the level of profit
• alternative investment